Dec. 22 (Bloomberg) -- Shipments of clothing, auto parts
and frozen food risk being gridlocked at U.S. ports from Maine
to Texas as about 15,000 dock workers prepare to strike.

The International Longshoremen’s Association is vowing to
walk out if a deal isn’t reached before the Dec. 29 expiration
of its contract with the U.S. Maritime Alliance, whose members
include container-carrier companies. Talks broke down this week
after nine months of negotiations.

A strike would be the first at East Coast and Gulf Coast
ports since 1977. The fallout may be greatest for the New York
and New Jersey area, still reeling from superstorm Sandy, and on
automakers such as Bayerische Motoren Werke AG with factories in
the U.S. Southeast that might struggle to get parts, according
to consultant Martin Associates.

“It’s going to be expensive and painful,” said Ed Sands,
a logistics specialist at procurement management firm Procurian.
“If you consider the East Coast labor picture, Maine to Texas,
and the amount of the economy that is tied to the flow of goods
in and out of U.S. ports in that geographic range, there’s an
enormous amount of potential impact for the U.S. economy.”

Union workers wouldn’t move containerized cargo, including
frozen foods, household goods and clothing, ILA President Harold
J. Daggett told members in a Dec. 19 letter. Military cargo,
mail, bulk items, finished autos and perishable items with a
“limited shelf life” would still be handled, he wrote.

‘Huge Effect’

Even with the exemptions, a shutdown would have “a huge
effect” on the economy, particularly if it lasts beyond mid- to
late January, according to K.C. Conway, executive managing
director at consultant Colliers International.

“You pile it on at the time that if these guys can’t do
something in Washington with the fiscal cliff, it’s a
compounding unknown that I think definitely puts us into
recession,” Conway said in a telephone interview from Atlanta.
The so-called fiscal cliff refers to more than $600 billion in
automatic tax increases and spending cuts set for next month.

The union and employers deadlocked in bargaining that has
already required one extension and a federal mediator’s
intervention. The dispute centers on so-called container royalty
fees, or levies on cargo that supplement wages. Employers seek
to cap the payouts that the workers say are “untouchable.”

While the union hasn’t changed its stance, ILA’s executive
officers met yesterday and reached out to the lawyers for the
USMX and the federal mediator expressing willingness to resume
talks, Jim McNamara, a spokesman, said by phone. The ILA hasn’t
yet received a response from the USMX and no meetings are
currently scheduled, he said, boosting the risk of a walkout.

‘Serious Consequences’

A strike “could have serious consequences for the nation’s
economy as well as for ILA members themselves, making it more
important than ever that both sides work to reach an agreement
and avert any disruption at the ports,” the USMX said in a
statement posted yesterday on its website.

A strike would be most damaging to the retail and
manufacturing industries, said John Martin, an economist at
Martin Associates in Lancaster, Pennsylvania. Those industries
generated about 18 percent of U.S. gross domestic product last
year.

Automakers such as BMW, which has a plant in Spartanburg,
South Carolina, and Kia Motors Corp., which operates a factory
in West Point, Georgia, rely on the ports to import parts, said
Sands of King of Prussia, Pennsylvania-based Procurian. They
also ship finished vehicles by sea.

“If you run out of parts, at some point that line is going
to shut down,” he said in a phone interview.

Auto Exports

Exports of finished cars, which typically aren’t shipped in
containers, shouldn’t be affected under the terms for the strike
outlined in Daggett’s letter, Martin said.

“But who knows? You don’t know until the actual
occurrence, until it happens, whether they will honor that or
not,” he said.

BMW is “prepared for all eventualities to ensure our
business continues uninterrupted,” Kenn Sparks, a spokesman for
the Munich-based company’s North American operations, wrote in
an e-mail. Representatives for Seoul-based Kia didn’t return
phone and e-mail messages seeking comment.

Retailers’ Request

The National Retail Federation, a Washington-based trade
group, sent a letter to President Barack Obama on Dec. 20
renewing its call for the use of “all of the options
available,” including the Taft-Hartley Act, to prevent a
shutdown that would cause delays in consumer-goods imports.

Taft-Hartley empowers leaders to intervene in strikes that
create national emergencies. The law was last invoked by
President George W. Bush in 2002, after a lockout shuttered West
Coast ports for 10 days.

Federal mediators are assisting with the negotiations, Matt
Lehrich, a White House spokesman, said by e-mail.

“We continue to monitor the situation closely and urge the
parties to continue their work at the negotiating table to get a
deal done as quickly as possible,” Lehrich said.

A shutdown would pose an additional hurdle for New York-area companies still restocking goods destroyed by Sandy, said
Martin, the economist.

“It certainly is a double whammy,” he said. “This will
really exacerbate the problem because any type of supplies that
you need” may be unavailable.

The Port Authority of New York & New Jersey is “in regular
dialogue” with the affected parties, Executive Director Patrick
Foye said in a Dec. 20 interview after testifying at a hearing
in Washington about Sandy recovery spending. He declined to
comment on whether the agency would ask Obama to intervene.

“The economic impact of a strike to the New York-New
Jersey region would be significant,” Foye said.